December 29th, 2020
The Interest Rate Reduction Refinance Loan (IRRRL), sometimes called a “Streamline” loan, is a product for existing VA borrowers interested in taking advantage of lower interest rates. An IRRRL can help a VA borrower reduce their monthly payments by refinancing at a lower interest rate.*One of the best features of these kinds of loans is that they require very little paperwork and can often require almost no out-of-pocket costs. If closing costs are an issue, borrowers have the option of rolling their closing costs into the total loan amount. Additionally, new appraisals are rarely needed, which can further simplify the process.
The VA Streamline is designed to let you refinance your current VA loan and save money. Whether you’d like to lower your interest rate, transition from an adjustable-rate loan to a fixed-rate loan, or both, a VA IRRRL Refinance helps many borrowers take advantage of today’s historically low rates. The loans are designed to be easier to apply for than other types of refinance loans and often the closing times are significantly shorter as well. To qualify, you must show a financial benefit or transition out of an adjustable rate (ARM) loan.
VA borrowers have multiple options to choose from, making VA IRRRL loans a flexible option for different financial needs. Fixed rates options allow you to choose any loan term from 10 to 30 years. This is helpful if you’re already a number of years into your current loan and you don’t wish to extend your payoff date. There is even a government-backed option that allows you to roll your closing costs into the total loan amount.
There are several reasons why current VA homeowners may want to take advantage of a VA Streamline Refinance. The most common is that a IRRRL lowers your interest rate by refinancing your existing VA home loan. Simply put, a lower rate means that, in most cases, your monthly mortgage payment should decrease.*
Another common reason is to transition from an adjustable-rate mortgage (ARM) into a fixed-rate mortgage, where your payment will stay roughly the same throughout the life of your loan.
The flexibility of a VA IRRRL loan is another great reason to consider it. Even if you’re several years into your current VA loan, you can choose a term that saves you money without extending the time it will take you to pay it off.
VA loans are backed by the U.S. Department of Veterans Affairs as a benefit for veterans, service members and their families. The basic qualification requirements include those who served on active duty for more than 90 consecutive days during wartime or more than 181 days of service during peacetime. For National Guard members and Reservists, the veteran must have served at least six years. Some surviving spouses of veterans who died while in service or from a service-connected disability may also be eligible.